Many college students are not overly concerned with the idea of investing. After all, investing, they think, has traditionally been a concern for adults who have 9-to-5 jobs and 401(k) plans.
However, college students make up a wonderful population to teach to about investing because compound interest — i.e., time — is on their side given their young age.
If you want to get a college student you know excited about investing, here's how to do it. (For more, see: Top 8 Most Profitable Majors of 2015.)
Teach Them How to Budget
Before teaching college students about investing, it's important to familiarize them with how to budget. After all, they won't know how much they can allocate to investing until they've taken a closer look at their monthly expenses and spending patterns.
Typically when people set up a budget for the first time, it takes time to get used to tracking their spending. As you're teaching them about budgets, have them input a category just for investing. They can practice by setting a set amount of money aside for a few months. This will get them used to figuring out how to allocate and save the money needed to invest.
Teach Them the Value of Investing
Investing is a foreign topic even for many adults. Many people wrongly think that investing is complicated or that because they don't have a finance degree, they won't be able to invest wisely.
Help college students by allowing them to see the value of it. Teach them about compound interest and encourage them to save as early as possible. It can be hard for someone so young to care about their retirement years, but if you phrase it in terms of freedom, wealth, and having the option to stop working extremely early, an intelligent and motivated college student will see the value early on. (For more, see: Best Ways to Save for Retirement Without an IRA or 401(k).)
Choose Companies They Know, Love
It's easy for new investors to get overwhelmed with all the information. Mutual funds, index funds, CDs, stocks, bonds ... every financial term in the book can seem difficult to understand for a newbie. Instead, teach them that they can invest in a company they know and love. Whether it's the corporation that designed their computer, clothes, or favorite food, show them that if they believe in the brand then it makes sense to own a small piece of it.
This will help keep them engaged — for someone who has invested in a particular fast food place, he knows that each time he eats there, in some small way he is helping his investment grow.
Compile a List of Interesting Finance Books
A college student won't want to read a dry investing book. Instead, give her several personal finance books, ones geared towards young people. Financial experts like Dave Ramsey, Farnoosh Torabi and Suze Orman have engaging writing styles that teach financial lessons in a way that is more fun and encouraging than lots of others out there. You could even consider genuinely interesting business books that pack in lessons on the market, investments, corporate finance and more, such as Barbarians at the Gate: The Fall of RJR Nabisco or Liar's Poker.
The Bottom Line
Many college students never consider investing at their age. With limited income and real world experience, investing seems like a far-off topic, one they can learn about later in life. Some ways to get them interested include having them follow social media accounts of personal finance experts, having them invest in and track companies they love, and teaching them how to budget. (For more, see: The Best Retirement Plan for Millennials.)